Dmitry Pankin: IFIS are important players in PPP syndicates

26.05.2017 16:38
Dmitry Pankin: IFIS are important players in PPP syndicates

YEREVAN, May 26. /ARKA/. "A key to the success of major infrastructure projects is cooperation between public and private capital with efficient risk distribution among investors. International financial institutions (IFIs) that have necessary practical experience and long money are important players in arranging syndicates in the market of public-private partnerships (PPP)," said Dmitry Pankin, Chairman of the Management Board at Eurasian Development Bank (EDB) at the fourth Global Infrastructure Initiative (GII) Summit in Singapore.

He also pointed out that the EDB countries, except for Armenia, have already devised legal frameworks for this type of projects. Armenia has examples of successful concession agreements within its general regulatory framework. Dmitry Pankin also said that Kazakhstan does not have many PPP projects despite its rather sophisticated legislation. This suggests that an elaborate regulatory framework is not the only and sufficient condition for raising private capital's share in joint investment projects with the state.

"What is of significantly greater importance to PPP advancement is the evolution of the risk allocation mechanism that should be concordant to market developments," Dmitry Pankin added. "We believe that EDB, as an international financial institution that forecasts medium- and long-term needs of its growing economies, can help to bring together projects and investors by assisting multilateral development mechanisms. At the same time, we'll be able to ensure an acceptable distribution of project risks among participants, especially, in big projects that require considerable investments."

Dmitry Pankin provided examples of successful cooperation between public and private capital in infrastructure projects with EDB's participation. These include the construction and operation of the Western High Speed Diameter road and the reconstruction of Pulkovo Airport in Saint Petersburg (two PPP projects).

According to EDB, the public sector remains the key investor in infrastructure today, with IFIs accounting for a mere 1% of all global infrastructure investments. At the same time, IFIs have a greater share in infrastructure projects in the EDB countries. Development banks, for example, account for 18% of all investments in the Kyrgyz Republic, 19% in Tajikistan, and 26% in Armenia. "The high level of IFI involvement usually correlates with high investment risks for private capital in these countries. Here, EDB works primarily through soft loans extended via the Eurasian Fund for Stabilisation and Development," Dmitry Pankin explained.

Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. EDB's charter capital totals US $7 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan. -0-

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